Shorter filing season will put pressure on taxpayers

The South African Revenue Service (SARS) has indicated that the filing season will be three weeks shorter this year to allow SARS more time to verify information supplied to them and to finalise audits. According to the SARS website, the deadline for electronic submissions of tax returns by non-provisional taxpayers has been brought forward to 31 October, as opposed to the last week in November.

Barendine Duvenhage, the managing partner at NomadIQs, said South African resident taxpayers working abroad may find themselves under more pressure than before to obtain proof that they have paid tax in the foreign jurisdiction. To avoid paying tax on the foreign income in South Africa (especially for people on short-term assignments) taxpayers must claim a credit for taxes paid in the foreign country. ‘To claim the tax credit, one has to prove that tax has been paid and is not recoverable in the other country. The proof is normally an assessment which has been issued by the foreign revenue authority.’

Without this proof, SARS will not allow a deduction and the South African will either have to pay tax again in South Africa and wait for a refund or request a suspension of payment to avoid penalties and interest while he waits for the necessary documentation.

Duvenhage, also a member of the personal tax workgroup of the South African Institute of Tax Professionals, says taxpayers could submit their returns before receiving proof. The taxpayer will have a few days to submit the documents once SARS requests supporting documentation for the claim. ‘Just as we cannot rush SARS to finalise an assessment, we also cannot rush a foreign government to provide proof of tax paid to satisfy SARS.’ She says problems with claiming tax credits is not a new problem. However, the shorter filing season may exacerbate the problem. ‘In many instances our tax year differs from the tax year in foreign jurisdictions, causing a timing mismatch. The shorter the filing season, the more pressure there will be on the taxpayer,’ said Duvenhage.

Duvenhage adds that taxpayers who are not able to offer proof in time may be required to file an objection and a suspension of payment while they wait for the proof that they have paid tax in the foreign jurisdiction. It is going to be an additional administrative burden and possible cost. She said the SARS electronic filing system (eFiling) compares with the best in the world and she recommends that taxpayers who are not yet registered for eFiling do so as soon as possible.

If the proposed new deadlines for the filing season is made final, people who are not registered for eFiling will have to submit their returns by 21 September. ‘There is no reason why taxpayers cannot file earlier,’ she said. However, they rely on their employers for issuing their tax certificates (IRP5s) timeously and without errors, their medical aid funds for certificates of contribution and their financial companies for certificates of retirement annuity contributions. Once taxpayers are in possession of their supporting documents which indicate income earned and expenses paid, there is no reason to postpone filing the return. ‘South African taxpayers should be more aware of their tax obligations and must make an effort to file sooner rather than later.’ SARS branch offices and the call centres get busier closer to the deadline. This is especially true if taxpayers will be visiting SARS to receive assistance with the submission of their returns.

Duvenhage advises taxpayers to have all their supporting documents ready and in a format acceptable to SARS. Often medical aid and bank certificates are password protected and cannot be uploaded unless the password is removed.

Provisional taxpayers, whose tax affairs are more complex and who have more than one income stream – such as rental or interest income – still have until the end of January to submit their returns.

WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.